U.S. job growth turned sluggish last month but was good enough to help nudge down the nation's unemployment rate to the lowest level since September 2001, the government reported yesterday.

Employers added 78,000 non-farm payroll jobs in May, the smallest gain since August 2003 and a sharp slowdown from the 274,000 added in April, the Labor Department said.

The jobless rate ticked down to 5.1 percent from 5.2 percent, as the people who found work slightly outnumbered the new job seekers.

The jobs report fit many analysts' view that the labor market is improving slowly as the economy expands at a healthy, though slowing, pace.

"The economy continues to chug along at a very solid pace, and we're creating jobs," said Richard A. Yamarone, director of economic research at Argus Research Corp.

Some analysts were more pessimistic, noting other recent reports showing that industrial production fell in April, auto sales slipped in May and retailers catering to low-income consumers continue to post poor sales.

The jobs report "is another sign of faltering economic growth," said Paul Ashworth, senior international economist for Capital Economics Ltd.

Stock prices fell, as many investors concluded that subdued hiring will mean a slower expansion -- but not slow enough to prompt the Federal Reserve to stop raising short-term interest rates.

Fed officials remain likely to raise their benchmark federal funds rate, the interest rate charged on overnight loans between banks, to 3.25 percent from 3 percent at their meeting at the end of this month. With that increase, they will have raised it nine times since June 2004, by a quarter percentage point at each meeting.

The labor report left analysts divided about whether the Fed will lift the rate again at its August meeting, or perhaps leave it unchanged.

Job growth last month was strongest in health care and construction but was little changed in other major industry sectors, the department said.

Manufacturers trimmed their workforces for the third month in a row. The number of manufacturing jobs has fallen in 10 of the past 12 months.

Temporary jobs, which often are seen as a harbinger of future permanent hiring, fell as well.

Economists cautioned that the monthly data can swing a bit and said the underlying strength of the labor market is probably better than implied by the May figures and less robust than suggested by the April numbers. Employers have added an average of 180,000 payroll jobs a month this year, about the same as last year.

Others noted, however, that workforce changes tend to lag behind other economic developments. So the employers who were jolted by surging energy costs in March and early April may have reacted by pulling back on hiring in May.

Wages rose, on average, for most workers in May. Average weekly earnings for private production and non-supervisory workers rose by $1.01 to $541.81, an increase of 0.2 percent. Those workers account for about 80 percent of the workforce.

"Workers' incomes are still rising at a decent rate to support continued consumer spending," said Stuart G. Hoffman, chief economist of PNC Financial Services Group Inc.

But other analysts noted that the inflation rate for May, which will be released later this month, may show consumer prices wiping out most, if not all, those wage gains, as they have for several months.

"This sharp loss of purchasing power . . . leaves the continued growth of consumer spending increasingly dependent on spending down home equity and other borrowing," said Charles W. McMillion, chief economist of MBG Information Services.

The number of jobless Americans, at 7.6 million, was essentially unchanged last month, the Labor Department said.

White unemployment was unchanged at 4.4 percent. Black joblessness fell to 10.1 percent in May from 10.4 percent the month before -- still more than double the white rate. The Latino unemployment rate dropped to 6 percent from 6.4 percent.

Fed officials were clearly more worried about inflation pressures than slowing economic growth when they last met in early May, according to minutes of that meeting.

Since that meeting, however, energy costs have edged down. Measures of so-called core inflation, which exclude prices of food and energy items, have been tame. Manufacturing has lost steam.

"All in all, we believe the trends in the labor market and the economy in general are still healthy enough for the Fed to keep tightening" credit, said Kevin Cummins, an economist at UBS.

A landscaping company seeks workers outside Chesterland, Ohio. Despite slower job growth in May, the U.S. unemployment rate fell to its lowest level in nearly four years.